{"id":3611,"date":"2023-09-12T10:00:00","date_gmt":"2023-09-12T09:00:00","guid":{"rendered":"https:\/\/ctt-group.co.uk\/private-client\/?p=3611"},"modified":"2023-09-26T15:45:21","modified_gmt":"2023-09-26T14:45:21","slug":"saving-it-for-the-kids-pensions-isas-and-premium-bonds-for-children","status":"publish","type":"post","link":"https:\/\/ctt-group.co.uk\/private-client\/saving-it-for-the-kids-pensions-isas-and-premium-bonds-for-children\/","title":{"rendered":"Saving it for the kids: pensions, ISAs and premium bonds for children"},"content":{"rendered":"
\n\t\t
\n\t\t\t

Pensions are a key lifetime planning tool to save and plan ahead for the future. But have you ever considered setting up pensions for your children?<\/p>\n

The idea of initiating retirement savings during childhood might not immediately cross our minds. However, establishing a pension fund, even though the child\u2019s retirement will be decades away, can pave the way for their financial stability in the years to come.<\/p>\n

A growing pension fund is reassuring for both parents or guardians and children, allowing the latter to focus on their financial goals when starting their career and improve their chances of a comfortable retirement.<\/p>\n

There are several key benefits to starting pensions for your children. In this article, we discuss how it can be a tax-efficient way to invest into a child\u2019s future, the benefits of compound interest and how it works, the advantages a child will get from their pension and when it is possible to start a pensions for children.<\/p>\n

Pensions not only offer a tax-efficient method of saving, but initiating pensions for children at the earliest opportunity allows even minor contributions to enjoy extended growth periods.<\/p>\n

When can you start pensions for children?<\/strong><\/h3>\n

It’s possible commence a pension for a child right after their birth! Numerous pension schemes permit parents or guardians to begin a pension account for their child and begin contributing on their behalf. Embarking on a pension early can yield substantial benefits, due to extended-term growth and compound interest.<\/p>\n

It\u2019s important to note that only a parent or legal guardian can start a child\u2019s pension, but once it\u2019s open, anyone is able to contribute. Comparable to an adult\u2019s retirement fund, the government provides a 20% boost to contributions made towards the child\u2019s savings, irrespective of their tax-paying status.<\/p>\n

Furthermore, should the child transition into being a higher or additional-rate taxpayer later on, they have the opportunity to claim additional tax relief on their contributions through the self-assessment process. This type of tax relief offers an advantage that is unavailable through an ISA.<\/p>\n

Any increase in value produced by the pension will not be susceptible to Income Tax or Capital Gains Tax. The parent or guardian will look after their child\u2019s pension until the child turns 18, whereby the control passes over to them.<\/p>\n

The bottom line is, the sooner<\/em> your clients start paying into pensions for their children, the longer<\/em> the money has to grow.<\/p>\n

How much can be paid into a child\u2019s pension?<\/strong><\/h4>\n

There is the option to contribute up to \u00a32,880 annually into a child\u2019s pension, and this amount can be boosted to \u00a33,600 with the addition of government tax relief. Investing into a child\u2019s pension not only benefits the child, but could also potentially reduce clients\u2019 Inheritance Tax by using the annual gifting allowance of \u00a33,000 for IHT or the exemption applicable to payments sourced from home.<\/p>\n

Although the yearly contribution cap for children is notably less compared to that for adults, the power of compounding ensures that even modest contributions can accumulate significantly over an extended period.<\/p>\n

Benefits of pensions for children:<\/strong><\/h4>\n

Compound interest<\/strong><\/p>\n

Compound interest is the interest gained from the original deposit and any interest previously earned, combined with the overall amount. This accumulated interest then continues to generate more overtime, resulting in rapid expansion of the pension fund. Even modest initial contributions made during the child\u2019s early years can lead to significant growth due to compounding, ultimately fostering a larger pension fund as the child approaches retirement.<\/p>\n

Less impact on Current Income<\/strong><\/p>\n

Initiating a child pension with gradual, modest contributions extends the commitment duration, and benefits clients\u2019 immediate financial obligations. Integrating the pension fund into a budget, streamlines day-to-day financial management, unlike substantial later contributions that may disrupt cash flow.<\/p>\n

A flexible approach to pension savings allows for increased deposits during prosperous periods and decreased ones during setbacks. Modest initial contributions foster a sense of achievement as the pension fund expands, fuelling sustained commitment, and therefore harmonising the child\u2019s future with existing financial stability.<\/p>\n

Other ways to save money for a child:<\/strong><\/h4>\n

Junior ISAs<\/strong><\/h4>\n

Junior ISAs are tax-efficient savings and investment accounts for children under 18 in the UK. Parents, guardians, and family can contribute up to a government-defined annual limit, with tax-free earnings and interest. They are similar to adult ISAs in that they allow funds to be allocated to both cash and stocks and shares accounts, but with a reduced yearly limit \u2013 the current maximum contribution for a Junior ISA is \u00a39,000 per tax year. Also, it is key to note that Junior ISAs transition into adult ISAs once the child reaches 18, granting them access to their savings.<\/p>\n

Premium Bonds<\/strong><\/h4>\n

Premium Bonds offer a unique approach to savings \u2013 instead of accumulating interest, they off the opportunity to win tax-free cash prizes in a monthly drawing. These bonds, provided by the National Savings & Investments backed by the treasury, assure a secure investment option. You can buy Premium Bonds for a child, starting with a minimum of \u00a325 for 25 separate bonds, and anyone over 16 is eligible. However, since there is no guaranteed return on your savings, there\u2019s a common debate about whether there might be more favourable investment alternatives.<\/p>\n

To conclude, we hope this article has demonstrated clearly how beneficial initiating a child pension can be for your client and their children. <\/em><\/p>\n

If you would like any additional advice or support on this topic, please contact CTT Private Client.<\/u><\/a><\/em><\/p>\n\n\t<\/div>\n\t

\n\t<\/div>\n\t
\n\t<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":7,"featured_media":3612,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[1],"tags":[],"acf":[],"yoast_head":"\nSaving it for the kids: pensions, ISAs and premium bonds for children - CTT Private Client<\/title>\n<meta name=\"description\" content=\"Pensions for children might seem an absurd idea when their retirement is so far off - but planning ahead has its benefits. Read more here\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ctt-group.co.uk\/private-client\/saving-it-for-the-kids-pensions-isas-and-premium-bonds-for-children\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Saving it for the kids: pensions, ISAs and premium bonds for children - CTT Private Client\" \/>\n<meta property=\"og:description\" content=\"Pensions for children might seem an absurd idea when their retirement is so far off - but planning ahead has its benefits. Read more here\" \/>\n<meta property=\"og:url\" content=\"https:\/\/ctt-group.co.uk\/private-client\/saving-it-for-the-kids-pensions-isas-and-premium-bonds-for-children\/\" \/>\n<meta property=\"og:site_name\" content=\"CTT Private Client\" \/>\n<meta property=\"article:published_time\" content=\"2023-09-12T09:00:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-09-26T14:45:21+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/ctt-group.co.uk\/private-client\/wp-content\/uploads\/sites\/4\/2023\/09\/pexels-oleksandr-p-12955547.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"2200\" \/>\n\t<meta property=\"og:image:height\" content=\"1467\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"CTT Group\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"CTT Group\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/ctt-group.co.uk\/private-client\/saving-it-for-the-kids-pensions-isas-and-premium-bonds-for-children\/\",\"url\":\"https:\/\/ctt-group.co.uk\/private-client\/saving-it-for-the-kids-pensions-isas-and-premium-bonds-for-children\/\",\"name\":\"Saving it for the kids: pensions, ISAs and premium bonds for children - CTT Private Client\",\"isPartOf\":{\"@id\":\"https:\/\/ctt-group.co.uk\/private-client\/#website\"},\"datePublished\":\"2023-09-12T09:00:00+00:00\",\"dateModified\":\"2023-09-26T14:45:21+00:00\",\"author\":{\"@id\":\"https:\/\/ctt-group.co.uk\/private-client\/#\/schema\/person\/2ee80a3f05c1786db5a83a7eb1dc2006\"},\"description\":\"Pensions for children might seem an absurd idea when their retirement is so far off - but planning ahead has its benefits. Read more here\",\"breadcrumb\":{\"@id\":\"https:\/\/ctt-group.co.uk\/private-client\/saving-it-for-the-kids-pensions-isas-and-premium-bonds-for-children\/#breadcrumb\"},\"inLanguage\":\"en-GB\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/ctt-group.co.uk\/private-client\/saving-it-for-the-kids-pensions-isas-and-premium-bonds-for-children\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/ctt-group.co.uk\/private-client\/saving-it-for-the-kids-pensions-isas-and-premium-bonds-for-children\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"CTT Private Client\",\"item\":\"https:\/\/ctt-group.co.uk\/private-client\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Saving it for the kids: pensions, ISAs and premium bonds for children\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/ctt-group.co.uk\/private-client\/#website\",\"url\":\"https:\/\/ctt-group.co.uk\/private-client\/\",\"name\":\"CTT Private Client\",\"description\":\"Just another CTT Group Sites site\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/ctt-group.co.uk\/private-client\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-GB\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/ctt-group.co.uk\/private-client\/#\/schema\/person\/2ee80a3f05c1786db5a83a7eb1dc2006\",\"name\":\"CTT Group\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-GB\",\"@id\":\"https:\/\/ctt-group.co.uk\/private-client\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/9b3f034c11e00c1104606a89abb4afd5?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/9b3f034c11e00c1104606a89abb4afd5?s=96&d=mm&r=g\",\"caption\":\"CTT Group\"},\"url\":\"https:\/\/ctt-group.co.uk\/private-client\/author\/countrywide\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Saving it for the kids: pensions, ISAs and premium bonds for children - CTT Private Client","description":"Pensions for children might seem an absurd idea when their retirement is so far off - but planning ahead has its benefits. Read more here","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/ctt-group.co.uk\/private-client\/saving-it-for-the-kids-pensions-isas-and-premium-bonds-for-children\/","og_locale":"en_GB","og_type":"article","og_title":"Saving it for the kids: pensions, ISAs and premium bonds for children - CTT Private Client","og_description":"Pensions for children might seem an absurd idea when their retirement is so far off - but planning ahead has its benefits. Read more here","og_url":"https:\/\/ctt-group.co.uk\/private-client\/saving-it-for-the-kids-pensions-isas-and-premium-bonds-for-children\/","og_site_name":"CTT Private Client","article_published_time":"2023-09-12T09:00:00+00:00","article_modified_time":"2023-09-26T14:45:21+00:00","og_image":[{"width":2200,"height":1467,"url":"https:\/\/ctt-group.co.uk\/private-client\/wp-content\/uploads\/sites\/4\/2023\/09\/pexels-oleksandr-p-12955547.jpg","type":"image\/jpeg"}],"author":"CTT Group","twitter_card":"summary_large_image","twitter_misc":{"Written by":"CTT Group"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/ctt-group.co.uk\/private-client\/saving-it-for-the-kids-pensions-isas-and-premium-bonds-for-children\/","url":"https:\/\/ctt-group.co.uk\/private-client\/saving-it-for-the-kids-pensions-isas-and-premium-bonds-for-children\/","name":"Saving it for the kids: pensions, ISAs and premium bonds for children - CTT Private Client","isPartOf":{"@id":"https:\/\/ctt-group.co.uk\/private-client\/#website"},"datePublished":"2023-09-12T09:00:00+00:00","dateModified":"2023-09-26T14:45:21+00:00","author":{"@id":"https:\/\/ctt-group.co.uk\/private-client\/#\/schema\/person\/2ee80a3f05c1786db5a83a7eb1dc2006"},"description":"Pensions for children might seem an absurd idea when their retirement is so far off - but planning ahead has its benefits. Read more here","breadcrumb":{"@id":"https:\/\/ctt-group.co.uk\/private-client\/saving-it-for-the-kids-pensions-isas-and-premium-bonds-for-children\/#breadcrumb"},"inLanguage":"en-GB","potentialAction":[{"@type":"ReadAction","target":["https:\/\/ctt-group.co.uk\/private-client\/saving-it-for-the-kids-pensions-isas-and-premium-bonds-for-children\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/ctt-group.co.uk\/private-client\/saving-it-for-the-kids-pensions-isas-and-premium-bonds-for-children\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"CTT Private Client","item":"https:\/\/ctt-group.co.uk\/private-client\/"},{"@type":"ListItem","position":2,"name":"Saving it for the kids: pensions, ISAs and premium bonds for children"}]},{"@type":"WebSite","@id":"https:\/\/ctt-group.co.uk\/private-client\/#website","url":"https:\/\/ctt-group.co.uk\/private-client\/","name":"CTT Private Client","description":"Just another CTT Group Sites site","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/ctt-group.co.uk\/private-client\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-GB"},{"@type":"Person","@id":"https:\/\/ctt-group.co.uk\/private-client\/#\/schema\/person\/2ee80a3f05c1786db5a83a7eb1dc2006","name":"CTT Group","image":{"@type":"ImageObject","inLanguage":"en-GB","@id":"https:\/\/ctt-group.co.uk\/private-client\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/9b3f034c11e00c1104606a89abb4afd5?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/9b3f034c11e00c1104606a89abb4afd5?s=96&d=mm&r=g","caption":"CTT Group"},"url":"https:\/\/ctt-group.co.uk\/private-client\/author\/countrywide\/"}]}},"_links":{"self":[{"href":"https:\/\/ctt-group.co.uk\/private-client\/wp-json\/wp\/v2\/posts\/3611"}],"collection":[{"href":"https:\/\/ctt-group.co.uk\/private-client\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ctt-group.co.uk\/private-client\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ctt-group.co.uk\/private-client\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/ctt-group.co.uk\/private-client\/wp-json\/wp\/v2\/comments?post=3611"}],"version-history":[{"count":5,"href":"https:\/\/ctt-group.co.uk\/private-client\/wp-json\/wp\/v2\/posts\/3611\/revisions"}],"predecessor-version":[{"id":3677,"href":"https:\/\/ctt-group.co.uk\/private-client\/wp-json\/wp\/v2\/posts\/3611\/revisions\/3677"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ctt-group.co.uk\/private-client\/wp-json\/wp\/v2\/media\/3612"}],"wp:attachment":[{"href":"https:\/\/ctt-group.co.uk\/private-client\/wp-json\/wp\/v2\/media?parent=3611"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ctt-group.co.uk\/private-client\/wp-json\/wp\/v2\/categories?post=3611"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ctt-group.co.uk\/private-client\/wp-json\/wp\/v2\/tags?post=3611"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}